Switching to top-paid group from lookback year for HCE determination

[Jakyasar]

Hi

A calendar plan has 2 owner HCEs, one non-owner HCE and one non-HCE as participants.

All but one owner HCE terminated in June 2021.

Doing some testing for 2021 and if I can switch to top-paid group, the testing will be ok.

The question is, can the plan be amended now to make the non-owner HCE a non-HCE? Never saw this situation before.

Thank you

[BG5150]

You can do it in-year, I beleive

 

[CuseFan]

agreed

[Gilmore]

You can amend the 2021 plan year to elect the top paid group for the 2021 plan year as long as the 2021 plan year has not ended, but the determination still uses the 2020 look back compensation for the determination for 2021.  That's probably what you were intending but the topic heading is a little confusing.

[Jakyasar]

Thanks all

I was concerned if it can be changed so that a terminated participant can switch from being a HCE to NHCE.

I will try to clarify a bit more and add a bit more information which I forgot to add.

This is a question for DB/PS combo.

DB plan paid the employee out in August 2021but PS is still pending and will not happen till 2022. Salaries not yet determined for 2021 for the active owner.

Per lookback year to 2020, was employee was HCE.

Now would like to amend to top-paid group prior to 12/31/2021 and make the terminated participant a NHCE.

As a reminder, DB benefit was paid out and PS is still pending. In order to change, must amend both plans for cross testing.

I hope I was able to clarify and not complicate further.